Can family trusts as landlords end a tenancy?

Landlords can end a tenancy with 42 days’ notice if they require the property as the principal place of residence for themselves or a member of their family.

However not all rental properties are owned by the landlord in their personal capacity.  The right to give 42 days’ notice can be unclear when a different ownership structure is involved, for example a trust or a company owns the rental property. 

A landlord who owns a property personally can give 42 days’ notice for themselves or their family to move into the property, but is it possible for trusts and companies to do the same when people associated with those trusts or companies have family members who want to move into a property?

Recent Tenancy Tribunal decision

A recent Tenancy Tribunal decision has clarified this question.

The case involved a family trust that gave 42 days’ notice to tenants in a rental property for the purpose of moving family in. When the validity of that notice was challenged on the basis that trusts cannot have families, the Tribunal agreed with the trust.

The Tribunal held that in family trusts, the property may be held on trust for the beneficiaries, but the trustees are the legal owners. In this situation, a trust is not a separate entity from its trustees, and notice can be given by trustees in order for them or their family to move into the property.

Not public trusts

Importantly however, public trusts (such as Public Trust or Perpetual Guardian) and companies are separate legal entities, and do not have “families”. They cannot give 42 days’ notice to end a tenancy.

The trust relationship is key

The decision demonstrates that it is the nature of the trust relationship that is relevant when deciding if 42 days’ notice can be given to move family into a tenanted property.  The Tribunal was focused particularly on the fact that this was a family trust, where the trustees and the beneficiaries were the same people.  The situation may well have been different if the trustees were all independent of the beneficiaries.

Are you a landlord wanting to give 42 days’ notice?

If you are a landlord and own your rental property through a trust, you may be uncertain about whether or not you can give 42 days’ notice to end the tenancy so you or a family member can move into the property.  Your experienced legal advisor will be able to give you advice specific to your situation, to make sure you give take the right steps and avoid a dispute with your tenant.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-priced Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.